Comments on: Former Treasury Sec'y O'Neill says "NO MORE SUBPRIME MORTGAGES!"

By: AJ

AJ — Wed, 19 Nov 2008 23:42:25 +0000

To Thomas,

What “our” people (the irony) know is that if you want housing on par with any tier of income, you better earn that tier of income. This is not an issue of racism, dignity, or respect. This is an issue of common sense. It’s that simple – get over your OWN racism before you try to engage in a topic like this.

By: matt d

matt d — Wed, 19 Nov 2008 19:12:47 +0000

Yes another Matt

The only reason I don’t like the 20% rule is it does not equal saving for your down payment but instead paying more to rent! Look at liability insurance, mandating everyone to have it equaled increased liability premiums. I had a great driving record but since I was young and did not have credit established my rates went up drastically once the law passed.

I’m not against down payments because it is smart business but the greed which has caused our current problem would contribute to the average American having less saving because of higher rental rates.

Government needs to regulate and not mandate business decisions. Business should not be told to make bad loans so not to appear they are discriminating a class of people. If business feel you are credit worthy they could careless what your skin color is, because the only color they see is green. Government should not save companies that make bad decisions unless it was the government regulations which caused the problem, which in the current case there is a little of both.

In short this is America and the government needs to fix the problem they created and let business make money or go under. For every business that closes due to poor management another one will open to take its place.

By: Tim

Tim — Wed, 19 Nov 2008 18:29:28 +0000

As a banker I can tell you first hand that sub-prime mortgages are still being developed and purchased by Freddie and Fannie, credit swaps are still bought and sold by the billions daily. We passed a “bail out” package but didn’t place any controls on the industry.

By: Thomas

Thomas — Wed, 19 Nov 2008 13:52:04 +0000

This is the most racist bunch of posters I have ever seen. Supporting a race monger will not put people in homes and further the American dream. This will effect Africans the most and you people know it. This is our country too and we have a right to affordable housing on par with the rest of white America. Not to worry what you people think. Obama will see to it that we are treated with dignity and respect.

By: Timw

Timw — Tue, 18 Nov 2008 20:56:05 +0000

Hes not entirely right. If a house costs, say, 250,000 and a buyer puts down 10% (25,000.00)add closing costs of around 4% minimum thats 35,000 hard earned money. If credit is good, most people are not going under for 35,000. O Neal just shows his ignorance. If 20% is good, how about 30%? What the hell, make them pay cash. Jerk.

By: Rob

Rob — Tue, 18 Nov 2008 18:06:16 +0000

You’re nearly 10 years late on this proposal.

By: Mo Voter

Mo Voter — Tue, 18 Nov 2008 17:04:46 +0000

Gee, what a novel concept, only make loans to people who can resonably be expected to repay them. The 20% rule was a good limit. If you can’t come up with the self discipline to budget your money to save up the 20% you won’t be able to budget well enough to make the mortagage payments. I spent my first few working years living on as little money as possible while saving every penny I could to put 20% down on my first home. Anybody can do it, it just requires discipline and not making tons of expensive impulse purchases. I ate beans, rice, and mac & cheese for those first years, didn’t have color TV or cable either. A lot of people today, especially recent college graduates, expect instant gratification and don’t want to have to wait to buy anything. If you can’t pay cash, don’t buy it.

By: Andy C. in Alabama

Andy C. in Alabama — Mon, 17 Nov 2008 16:27:05 +0000

I agree with Frank R. I purchased my first home as a subprime borrower, and now own 4… all paid down below the 80% threshold. There’s nothing wrong with subprime loans, but lending institutions need to be given discretion in who to lend to once again, and assume the risk for lending to those people. Fannie and Freddie, being GSEs, should return to their function of buying mortgages with the total debt against the property less than 80% of the value to free up bank capital, and maintain that strict rule. Any bank originating a loan or credit line to push the debt to value ratio above 80% should be required to buy the mortgage.
The bailout is failing and will ultimately fail because it does nothing to address the lack of transparency in the financial markets. It does nothing to strengthen the rules to protect consumers from fraud. It does nothing to ensure proper valuation of risk or disclosure of that risk from the originator to the buyer. The system has been exploited by fraudsters, and will not be righted until consumer confidence returns, no matter how inexpensive housing becomes.

By: Frank R

Frank R — Sun, 16 Nov 2008 20:09:10 +0000

If anyone wants to see a “Financial Nuclear Winter” that will make the Great Depresson look like a minor down turn then let Paul O’Neill head the Treasury Department. His claim that everyone must have 20% down to buy a home will crush this economy.

Sub-prime and alt-A loans have issues and were used and abused in the past. But that doesn’t mean every house must be purchased with 20% down. Does he realize that every home purchase with either VA or FHA financing doesn’t require 20% down? These loans do require the ability to pay back the loan using proven debt ratios, an acceptable credit history and verifiable source of income. What fantasy world is he living in?

As a mortgage banker for the past 20+ years I can tell you the vast majority of buyers do not have 20% down. That doesn’t mean they can’t afford the house nor that they have no incentive to make their payments. I have bought 5 homes in my time, never once having 20% down. I have never missed a payment or even come close to defaulting. At age 45 I still might not own a home if I had to come up with 20% down. I would have had had to stop funding my retirement savings as well as college savings plans not to mention life and disability insurance policies.

Does he not recognize the role housing plays in our economy? What about the wealth and stability created through homeownership? I really don’t think the majority of Oboma supporters would have voted for a required 20% down homeownership plan.

Oh what a great economy we will have if we all simply pay cash for our cars, payoff every credit card at the end of the month and put 20% down to buy a house. It is just so simple, gosh why didn’t I think of that! Oh by the way, don’t send your kid to college if you can’t pay cash for that (remember student loans are evil too!) Good luck to all and by the way, I have some rental property if you need a place to live.

By: Ixion

Ixion — Sat, 15 Nov 2008 23:32:43 +0000

I have been saying this for years. I was a loan officer at a large global bank and the loans we were required to give to unqualified borrowers was dumbfounding. I say abolish the Community Reinvestment Act and get back to the 20% down we used to require.

If you look in any neighborhood in America today, you will see that there are several homes that are not taken care of properly. Home ownership is a privilege, not a right. Many people should not own homes, as they are not now, nor will they ever be responsible enough to manage a home and the incumbent responsibilities.